The Posted Workers Directive: Right Battle, Wrong Timing

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The newly elected French President, Emmanuel Macron, has made a point of reforming the 1996 Directive (96/71/EC) on posted workers. While this battle is a legitimate one in principle, the current political context may not be the most appropriate in which to carry it out.

What do a Polish construction worker named Jan and Marianne, a French engineer, both working abroad, have in common? If they work in a third country for a firm established in their country of residence, they’re probably posted workers; this means that they both benefit from the freedom of movement granted to service providers and workers by the EU treaties in order to make a living in another country of the EU.

In 2016, the European Commission proposed a reform of the 1996 Directive on posted workers, which the European Parliament is currently working on. If the majority of European citizens has never heard of it, it’s probably because it only concerns 1% of the total workforce of the European Union, according to the most recent data provided by the European Parliament. Despite the limited number of people it directly affects, however, this topic led to a heated debate within European institutions, mostly because it opened the Pandora’s box of the political contradictions of the EU.

First and foremost, there is a difference between a posted worker and a European citizen working in a country of which he or she is not a national. The 96/71/EC Directive only concerns the first category, and according to the European Commission, it should be reformed in correspondence with the principle of “equal pay for equal work at the same place.” While the Western European countries, and especially France, are favourable to this idea, the Eastern countries are afraid that this kind of reform will make them lose the competitive advantage they have in terms of salaries (which detractors of posted workers qualify as “social dumping ” ). This is due to the fact that posted workers are submitted to the minimum working requirements of the country of work, while with national workers, there are additional parameters to take into account.

Back to the example of the Polish construction worker, Jan, let’s say he is a qualified mason posted to France by his firm. Under the Posting of Workers Directive, his employer will have to respect the minimum social standards required by the French Labour Law, including the minimum wage [1]. Working full-time, Jan will receive around 1150 euros per month of net salary, the minimum required by the French law. The average net salary of a qualified construction worker in France, however, is 1800 euros per month. In addition to that, since Jan is a posted worker, his employer’s contributions will be paid in Poland, his country of residence, where they amount to the 22,67% of the salary, while in France they would be up to 49% of an employee’s wage. Jan’s work will therefore be much cheaper than the work of someone as qualified as he is in the same country; on the other hand, if Jan were the employee of a French company in France, he wouldn’t be a posted worker and his salary would be the same as that of a French worker employed by the same firm.

The proposal of the Commission is perfectly fair from this point of view: in France, Jan and a French worker should be paid equally and follow the same rules, regardless of whether they are posted workers or not. Nevertheless, when it comes to the 96/71/EC Directive, the problem is not the content of the reform, but the consequences. Such a reform would in fact drastically reduce the number of posted workers without promoting a viable alternative.

Ever since 1996, but particularly after the Eastern enlargement of 2004, the possibility of posting workers from poorer to richer European countries has had the effect of redistributing wealth within the European Union, without negatively affecting the employment data of the richest countries. In France, for instance, the unemployed are 6,35 million (9,5% of the total 66,9 million population). Even if the 177674 workers posted to France were sent back to their home countries, the impact on the total unemployment rates would not be significant, especially considering that the French unemployed may not want or be qualified to do the jobs taken by the European posted workers; plus, the 139040 workers posted by France would also risk losing their job.

The practice of posting workers has also partially replaced the non-existent European fiscal policy that would have allowed a redistribution of wealth. If such a policy existed, the poorer European countries would probably be able to boost their economies and catch up with the richest ones, which would create the conditions to adopt a European Labour Law, which, unlike a reformed Posted Workers’ Directive, would be an effective tool to eradicate inequalities among European citizens.

In addition to this, the fact that posted workers are the only truly mobile workers in the European Union, actively taking part in the European Common Market, and that they are so few should make the European institutions want to encourage postings, instead of making them more complicated and less profitable. It is true that, in the current settings, a lot of abuse happens, although the 2014 Enforcement Directive meant to fight against illegal practices related to postings has never been really implemented. Instead of curing the disease, we are killing the patient.

The debate around the posted workers Directive basically means using good intentions in order to hide the structural problems of the European work market while pleasing the lowest protectionist instincts of some Western European countries. The ultimate aim of this reform seems to be keeping European citizens unable to benefit from an effective work mobility within the EU. Rather than closing our borders, we should be talking about how to make it easier for our citizens to cross them by creating a European retirement fund, a real European social security system and, most importantly, a common fiscal policy. Instead, we prefer to wage a miserable war on people seeking more freedom and better living conditions. Let’s hope Spinelli and Schuman can’t hear us from their tombs.

I would like to thank Shana Dagenhart and Chris Powers for the precious help they offered me by proofreading and editing this article.